South Korea’s Justice Minister said on Thursday that a bill is being prepared that will place some sort of ban on cryptocurrency trading on domestic exchanges.
South Korea’s Justice Minister Park Sang-ki told a news conference that there are great concerns regarding virtual currencies and the justice ministry is “basically preparing a bill to ban cryptocurrency trading through exchanges.”
People buy and sell cryptocurrencies at cryptocurrency exchanges. Most of them accept payment with credit card or fiat money (dollars, euros, pounds, yuan, yen, won, rupees, etc.). Fiat money is money that the government legally declares as legal tender.
The news sent digital currency prices sharply lower. According to Coinbase data, the price of bitcoin plunged by as much as 12 percent from the day’s high after Park’s comments.
South Korea’s Presidential office later confirmed that the bill had not yet been finalized and there will be no ban in the short-term.
South Korea is one of the world’s largest cryptocurrency markets.
Whilst news of the bill sent the virtual coin market in turmoil, Panos Mourdoukoutas at Forbes said that the concerns may be overblown.
“Korean government’s intention may be to ban anonymous cryptocurrency trading rather than cryptocurrency trade in general, to ensure that traders comply with its rules,” said Mourdoukoutas.
Digital currency fund manager Brian Kelly was quoted by CNBC as saying that if South Korea starts regulating cryptocurrency trading it could be good for technology.
“The ultimate outcome in Korea is still unclear, but if they move to regulate similar to Japan then it would be very positive for crypto,” Kelly wrote in an email. “The change in the market over the last few months is that the incremental buyer is US investors and Korea has become less of a driver.”
The Korea Blockchain Industry Association says that there are over a dozen cryptocurrency exchanges in South Korea. According to industry website CryptoCompare, the South Korean market accounts for between 6 and 12 percent of bitcoin trading.